Located at the intersection of East and West, the Middle East and Gulf regions have strong connections with both emerging and established economies. This unique position has allowed them to adopt various global best practices and made the region an exciting place for payment system innovation.
The UAE is at the forefront of a FinTech revolution, with its payments landscape changing rapidly, much faster than anyone expected just ten years ago. The country is focused on adopting advanced financial technologies and has modern regulations that support this growth. As a result, the UAE has become a key player in innovation, both regionally and globally.
The UAE’s payment system is moving from traditional processes to a fully digital, tech-forward ecosystem. Through its Financial Infrastructure Transformation program, the UAE Central Bank has outlined a clear plan under the National Payments Systems Strategy. This initiative aims to strengthen the existing system, ensure long-term resilience, and keep the UAE at the forefront of payment innovation.
Digital payments are already making an impact in the UAE. A market that once depended on paper processes now has a robust digital foundation. Core systems like cheque truncation (digital cheque processing), Direct Debit, the Wage Protection payroll system, and a 24/7 Immediate Payment System are streamlining payments nationwide. The addition of Payment Gateway tools for eCommerce is accelerating this shift even further. With strong FinTech growth, banks’ digital initiatives, and enhanced infrastructure for local and regional transactions, the UAE’s payment system is set for a major transformation.
Dubai and Abu Dhabi are leading FinTech hubs, supported by the Dubai Financial Services Authority and Abu Dhabi Global Market. Local startups and international payment providers are finding a home in an environment shaped by innovation-friendly policies, regulatory sandboxes, and proximity to regional sovereign wealth funds. Together, these factors are driving new digital payment options for both businesses and consumers.
Security and regulation are also getting more attention. New policies are sharpening oversight on cross-border payments, stored-value facilities, high-value transactions, and cybersecurity. Financial institutions are expected to fully embrace the digital agenda with the goal of safeguarding money transfers and meeting global standards. Corporate treasurers are also adopting best practices, using advanced ERP and Treasury Management Systems to streamline bank connectivity, data handling, and reconciliation.
By 2019, the country had achieved a digital readiness score of 16.42 out of 25 and was placed in the Amplify phase, a stage reached by nations with significant digital progress. This score reflects advancements across seven essential areas shaping the UAE’s digital landscape, with notable growth in basic needs, ease of doing business, and workforce development. At the same time, other areas, like the startup scene and investment in business and government, are still evolving.
Investment in information and communications technology has also ramped up, especially in telecom services. It accounted for $8.77 billion, half of the UAE’s ICT spending in 2019. This investment has allowed companies across industries to step up digitally: over a third of UAE businesses have adopted a full digital strategy, and nearly all were engaged in digital initiatives.
As already mentioned, the UAE’s payment landscape is also advancing quickly. With 83% of the population using banking services and 37% card penetration (according to ADGMA Research Centre), the foundation for digital payments is strong. Paired with one of the highest smartphone penetration rates globally (96%) and a highly tech-savvy population, digital payment adoption is growing fast. Government initiatives, like the Wage Protection System and the Dubai Smart City project, are promoting financial inclusion and introducing digital payment solutions, such as the Trriple mobile wallet for unbanked individuals. As a result, banks in the UAE are innovating rapidly to stay competitive and offer a wider range of digital services.
In eCommerce, payment options have diversified notably. By 2020, cards were the most popular payment method at 49%, followed by eWallets at 18%, with Visa as the leading card provider. Non-cash payments, especially at points of sale, have also surged. The value of card payments grew by 17.7% in 2022, followed by a 14.6% increase in 2023, which amounted to AED 451.4 billion ($123.0 billion). The UAE is well on its way to a fully digital economy, as it positions itself as a key player in the digital finance world.
With nearly everyone in the UAE connected by mobile phones and internet access, eCommerce is on the rise, with sales expected to reach $8 billion by 2025, according to the Dubai Chamber of Commerce.
When Amazon acquired Souq.com in 2017, it established a strong foothold in the UAE market and sparked even more competition as traditional retailers upgraded their online services. Mohamed Alabbar, founder of Noon.com, created a major regional competitor to Amazon and by partnering with eBay in 2018. Noon made U.S. products more accessible to UAE customers.
Popular items online include electronics, fashion, cosmetics, and media, with UAE shoppers seeking competitive pricing, smooth service, and user-friendly sites. Besides retail products, travel services like flights, hotels, and cabs are also in high demand online.
Leading retailers like Carrefour and Lulu Group have quickly joined the digital shift and launched online shopping platforms to stay relevant. The pandemic initially spurred online shopping growth, but trust in eCommerce has continued to build. UAE residents are now familiar with digital transactions across government e-services, too, and use online portals to pay bills, manage licences, and apply for visas. The Dubai Free Zones Council recently introduced regulations for free zone eCommerce, a move to attract more foreign investment and further strengthen the UAE’s position in the online retail sector.
To meet local needs, many retailers now offer Arabic-language options to break down language barriers that previously kept some shoppers offline. Cross-border shopping is also growing. 89% of respondents reported that they had made an online purchase with delivery from another country. They named secure payment gateways and dependable delivery services as primary factors. Social media heavily influences shopping choices here. Product reviews and recommendations are shaping consumer behaviour and giving eCommerce brands a valuable channel to boost sales.
Yet, challenges remain. Many consumers still prefer cash-on-delivery, with some hesitant about online payment security. Logistics can also be tricky, with the absence of a unified address system complicating last-mile deliveries, and the inability to touch products beforehand remains a drawback for some.
The digital payment landscape is driven by several key factors that are reshaping how consumers and businesses interact:
eWallets, also known as mobile wallets, are transforming the way people manage their money. These apps allow users to store, access, send, and receive funds directly from their smartphones, which makes it easy to track transactions in one place. The convenience of eWallets has made them one of the most popular methods for digital payments in the UAE in recent years. They are simplifying domestic transactions and making it easier to send money internationally, positioning themselves as trustworthy services for managing finances.
Biometric payments are gaining traction as a secure and efficient method for processing transactions at point-of-sale terminals. This technology uses fingerprint recognition to identify the cardholder. Users simply place their finger on the device, and if it matches a registered card, the transaction can proceed after entering a personal identification number.
QR codes are making payments faster and more convenient. By scanning a QR code at a POS terminal, customers can connect directly to the payment gateway without needing to enter banking information. This allows consumers to complete purchases without cash or physical interaction with the payment device and contributes to a smoother shopping experience.
Near Field Communication technology is changing how people use their credit and debit cards. NFC-enabled cards allow users to make payments with a simple tap on the POS device. There’s no need to swipe or enter a PIN, which makes transactions quicker and more convenient. As consumers become more comfortable with this technology, NFC-enabled cards are expected to grow in popularity within the UAE.
Payment links are emerging as a practical solution for completing transactions. These links, often in the form of a URL, direct users to a secure webpage where they can finalise their payments. This approach is especially beneficial for businesses looking to simplify the purchasing process for their customers.
In addition to these trends, the rise of virtual cards and digital currencies is also noteworthy in the UAE’s digital payment scene.
Cross-border payments are vital to the UAE’s economy, particularly due to its status as a global business hub and its large expatriate community. A notable example is the UAE-India remittance corridor, which is the second largest in the world. It illustrates the critical need for efficient payment systems for individuals and businesses involved in international trade and tourism.
The UAE’s supportive regulatory environment is driving the growth of innovative cross-border payment solutions for various needs, including consumer-to-business, peer-to-peer, and business-to-business transactions. Both traditional banks and emerging FinTech companies are entering this dynamic market and promise to create a competitive ecosystem focused on the user experience. For instance, networks like Visa are expanding their capabilities beyond card transactions to include digital wallets and bank transfers. The goal is to make payments not only quick and secure but also accessible to a wider audience.
The recent introduction of the Digital Dirham, the UAE’s central bank digital currency, marks a major milestone in the evolution of cross-border payments. This digital currency aims to streamline international transactions and become a more efficient and secure alternative to traditional payment methods. The successful completion of a cross-border transaction using the Digital Dirham signals its potential to reduce costs and improve transaction speeds.
The endorsement of the Digital Dirham by prominent leaders, including Sheikh Mansour bin Zayed Al Nahyan, stresses the UAE’s commitment to innovation in finance. As businesses and consumers become more familiar with digital currencies, the Digital Dirham could be the next thing to reshape the payment landscape in the region.
Small and medium-sized enterprises are fundamental to the UAE economy, accounting for 94% of all businesses and 86% of jobs. Among these businesses, many micro-enterprises founded by young entrepreneurs are leading the way in adopting new technologies and digital solutions. This new generation of leaders recognises the growing importance of cashless transactions and is eager to integrate digital payments into its operations.
Millennials play a significant role in this shift, as they make up a large portion of the UAE’s consumer base. Their online shopping habits influence how businesses adapt their services to meet the expectations of today’s consumers. Many of these young professionals live in vibrant urban areas, where they enjoy promising careers and possess considerable purchasing power while being comfortable with technology.
As Generation Z comes into focus, their consumer behaviours are also shaping the future of shopping. Notably, two-thirds of the UAE’s Gen Z population already uses digital or mobile wallets for everyday transactions. A recent survey by SixthFactor shows that this group feels the pressure to stay current with the latest trends, particularly in digital payments, and they express confidence in the security and reliability of these methods.
The market is seeing partnerships emerging between instalment providers, like banks and FinTech companies, merchants, marketplaces, and service providers. These collaborations aim to offer instant instalment options designed especially for young consumers. New integrated systems are being developed to give Gen Z and millennials more control over how they pay.
Gen Z, in particular, is increasingly open to exploring Buy Now, Pay Later options from reputable companies, so a growing demand for this type of payment solution isn’t expected to stop. The UAE is seeing a rise in BNPL adoption across various sectors, with service providers expanding their offerings to include virtual cards that facilitate BNPL services in physical stores.
The FinTech scene in the UAE is thriving and shows no signs of slowing down. Efforts by regulatory bodies and government authorities have made the region appealing to local startups and well-known international payment service providers alike.
The introduction of regulatory sandboxes and access to sovereign wealth funds has also created a lively environment for innovation. Various digital payment solutions have come up to serve both businesses and everyday consumers. Looking ahead, the payment landscape in the Middle East and the UAE is set for continued growth and international collaboration.
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